Solar Open Access Landed Costs Surge Across 11 Indian States in Q2 2025
The latest quarterly reports reveal significant cost increases for industrial solar consumers, with landed costs rising in 11 out of 15 major states. Market analysts point to escalating solar open access landed costs as the primary driver, squeezing savings from power purchase agreements (PPAs).
Understanding Landed Cost Dynamics
Landed cost represents the total per-unit price industrial users pay after accounting for:
- Transmission charges
- System losses
- PPA tariffs
This metric has gained importance even as India added 2.7 GW of new solar capacity this quarter, according to recent energy market data.
Regional Variations in Solar Economics
While Maharashtra maintained stable costs due to infrastructure investments, states like Tamil Nadu saw dramatic spikes. One textile manufacturer reported: “Our 15-year savings projections now require quarterly revisions.” This aligns with broader concerns about India’s solar supply chain challenges affecting project economics.
The PPA Tariff Factor
Many analysts underestimated how DISCOM grid upgrade costs would flow through PPAs. The result? Solar kWh rates that remain cheaper than coal, but with slimmer margins than 2024 business plans anticipated.
Impact on Project Viability
5MW projects may remain viable, but payback periods have extended by 6-8 months in affected states. Forward-looking developers are exploring hybrid solutions like pairing solar with battery storage systems to mitigate losses.
Emerging Opportunities
NTPC’s new green tariff program and Gujarat’s reduced wheeling charges offer potential relief. As one developer noted: “This cost crunch isn’t our first – adaptability keeps solar competitive in India’s evolving renewable energy landscape.”
